Freight costs for US caustic soda exports soared early this week as ship traffic through the strait of Hormuz is at a standstill after the US and Israel attacked Iran on 28 February, redrawing trade routes to key destinations and fueling higher energy costs.
Caustic soda freight costs jumped by as much as 50pc from the US Gulf coast compared with last week, various suppliers said. Freight to Brazil topped as much as $180/dry metric tonne (dmt) on Tuesday, marking a 28-38pc increase from late-February estimates, sources said. Additionally, freight costs for transatlantic routes climbed by 37pc, a trader added.
Escalating war in the Middle East does not threaten US caustic soda supply availability, nor does it immediately threaten global trade, but lends further support to rising spot values through logistical costs as global suppliers and shippers avoid the strait of Hormuz.
Iran on Monday claimed it has "closed" the strait of Hormuz connecting the Mideast Gulf and Gulf of Oman and intends to burn any ship that tries to pass through.
Vessel traffic through the key passage for crude, petrochemicals, fertilizers and other commodities has come to a virtual halt in the days after the US and Israel attacked.
Higher freight costs from the US further increase net forwards to the Mediterranean and Brazil, but spot export availability from the US is expected to shrink in the next 30-45 days as producers undertake planned turnarounds.
Elevated freight combined with seasonal maintenance increased early-week price discussions for new sales, with one source indicating offers could climb into the mid-$400s/dmt fob — a level last seen in June, Argus data show.
